Small Balance Loans For Small Apartment Purchases with Geoffrey Platt, VP Originator of Arbor Realty Trust

Geoffrey Platt joined Arbor in 2010 and is responsible for originating FNMA, Freddie Mac, HUD, CMBS and Bridge loans. In addition, he oversees The Arbor Select Program (ASP), a rigorous and comprehensive development curriculum for sales careers at the Company. Prior to joining Arbor, Platt was a Real Estate Assistant Manager at Pomander Associates LLC, a family-based real estate business. During his tenure, he identified acquisition opportunities, developed post-acquisition profit improvement strategies and repositioned underperforming assets. Previous to that position, Platt spent several years at Bear Stearns & Co., holding multiple management trainee positions within Fixed Income Trade Support, Derivatives Client Servicing, and Prime Broker Trade Support. He earned a Master of Science in Real Estate from New York University and a Bachelor of Arts in Economics from Brandeis University.

What you’ll learn about in this episode:

*Geoffrey’s journey from the fixed income desk at Bear Stearns to his unique progression at Arbor, from being an underwriter to becoming a VP, serving clients through multiple real estate processes as an originator.

*Arbor’s role as direct lender for multiple national agencies, including Fannie Mae, Freddie Mac and HUD and a CMBS (commercial mortgage backed security) platform.

*Arbor is a Top 10 Fannie Mae lender overall for the last eleven years, securing loans for affordable housing (including military and student housing). Arbor is also a top small balance Freddie Mac lender.

*How Fannie Mae and Freddie Mac define small balance loans. Fannie Mae starts at $750,000 and goes up to $5 million; Freddie Mac loans start at $1 million and go up to $7.5 million

*Arbor’s charter is to help provide affordable housing, including multi-family (five units or greater).

*The definition of “workforce housing” and why the bulk of the deals Arbor focuses on as an agency lender are C+/B- assets, or 60’s, 70’s, 80’s vintage assets.

*The recent revelation from both Fannie and Freddie that housing stock is solid and on the rise, the demand for that housing is very strong and the outlook for that housing is likewise strong.

*The ideal Arbor client: the individual entrepreneur looking to buy a small to midsize apartment complex of B-/C-plus quality

*The advantages of being a “volume shop,” including the opportunity to “grow” with their clients over multiple deals throughout the years.

*The real reason why Arbor is the #1 small loan “shop”

*The qualifications for an agency loan, starting with credit score – Fannie Mae’s minimum score is 680, Freddie Mac’s is 650 – and two years of multi-family ownership/management experience.

*What agencies recognize as “multi-family experience.”

*Another important qualification – liquidity.

*Requirements for bringing in a partner: he/she must have ownership in the deal and sign the loan docs. If you and your partner qualify combined, then you qualify for the loan

*Defining a “bad boy carve out” – used in commercial non-recourse loans, they give the borrower the ability to be personally “off the hook” in the event of a default on the terms of the note – thereby being non-recourse – but leave investors protected if the borrower has conducted themselves as a “bad boy.”

*100% of Arbor’s deals are non-recourse

*General percentage Fannie and Freddie will lend on acquisitions – 80% loan to value plus up to 3% for soft costs

*The Fed’s rates are going up. Generally speaking, the rates on a 10 year term (Arbor’s most popular term or range) is anywhere from 5.25% to 5.75%.

*How Arbor helps clients by taking advantage of the competition between Freddie and Fannie.

*Details about the charter of Freddie Mac and Fannie Mae and its relation to workforce housing.

*Some of the key differences between the loan policies of Fannie and Freddie, including Freddie being a very customizable program.

*Every loan that goes through Geoffrey has a 30 year amortization; there is nothing lower.

*Details of Freddie Mac’s small balance loan program; their SBO offers six different terms, three fixed and three hybrid.

*Examples of the varied kinds of deals Geoff has structured recently for clients with different financial needs

*Details of Fannie Mae’s assumption supplemental program.

*An explanation of prepayment penalties and yield maintenance, and how they vary between Fannie to Freddie.

*Arbor’s bridge loans – what they are and why the bridge program is not geared towards small balance loans (they start at 5 million or greater). A bridge loan allows the client to “bridge” between their purchase and a permanent loan take out.

*How Geoff’s hands on real estate experience helps him be more creative and think outside the box to better serve his clients.